Running a business can be a very rewarding experience and one that can be quite lucrative as well. That is why hundreds of thousands of small businesses are started every year in the USA alone. However, there will eventually come a time where you want to exit the business and either retire or move onto something new. There is a lot that goes into running a business, and it can get exhausting over time.
While some people will simply pass their business on to a family member or friend, or even close it altogether, many people will also elect to sell the business. As you could imagine, this sale can be a big deal and might be one of the most important transactions you make.
As a result, you want to be sure that you aren’t making any mistakes. Unfortunately, this is often easier said than done. There are many mistakes that can take place when selling a business, and this article is going to go over a few of them to watch out for.
Valuing the Company Incorrectly
Pricing your business is among the most important parts of the sale. You want to get a fair amount for the business, and not get taken advantage of. Unfortunately, setting the right price for a business isn’t always easy. If you set it too high, there will be limited interest. If the price is too low, people might think something is wrong with it, or you might not get the kind of financial exit you were hoping for.
One of the best ways to value your business is to enlist the help of a business broker. The value will normally be a range, and will depend on things like your profit, growth and even what other similar businesses have sold for. They can also help with various other aspects of small business selling, like finding buyers and helping with marketing.
Misrepresenting Your Business in Some Way
When selling a business, you as the owner will want to put the business in a good light. You will want to present it as a successful business with room to grow and highlight all of the positives about the business. This can help encourage a sale and help the potential buyer see the true value of the opportunity in front of them.
However, be careful not to misrepresent anything about your business. If you exaggerate numbers or other aspects of the business, potential buyers will find out and this could lead to serious trouble. Always be open and honest about your business, and answer any questions or concerns truthfully. You don’t need to bring up negatives out of the blue, but don’t try and hide them if asked about them.
Not Having a Plan in Place
When selling a business, there is often a small window of opportunity to get the best results and outcomes. It can sometimes take years for a small business to sell, so you need to have a long-term plan of how to not only eventually sell the business, but continuing ensuring it succeeds throughout the lengthy sales process.
If you just all of a sudden decide to sell your business on a whim, things are not likely going to go well. The more prepared you are for the eventual sale, the better outcome you will often have. This planning can include research on pricing, having updated records on hand, and even a detailed history of the company. Having all of this ready to show a buyer at a moment’s notice can be very impressive and show the work and time you have put into planning for this sale.
In conclusion, we hope this article has been able to help you become aware of some of the mistakes you should aim to avoid when selling your business. Avoiding them can be the key to a successful sale that benefits both parties.